Florida Dept. of Revenue v. Piccadilly Cafeterias, Inc., 554 U.S. 33 (2008)

In the case of Florida Department of Revenue v. Piccadilly Cafeterias, Inc., 554 U.S. 33 (2008), Piccadilly Cafeterias, a well-known cafeteria chain founded in 1944, faced significant financial difficulties leading to its declaration of bankruptcy under Chapter 11 of the Bankruptcy Code on October 29, 2003. As part of its bankruptcy proceedings, Piccadilly sought court approval to sell substantially all its assets outside the ordinary course of business, which included an auction that resulted in a winning bid of $80 million. To facilitate the sale, Piccadilly entered into a global settlement agreement with its creditors, which prioritized the distribution of sale proceeds. The Bankruptcy Court approved the sale and the settlement agreement on February 13, 2004, ruling that the asset transfer was exempt from stamp taxes under §1146(a) of the Bankruptcy Code. The procedural history of the case began when the Florida Department of Revenue objected to the Bankruptcy Court's ruling, arguing that the stamp tax exemption under §1146(a) did not apply to the asset transfer since it occurred before the confirmation of Piccadilly's Chapter 11 plan. Piccadilly filed its initial plan on March 26, 2004, and an amended plan on July 31, 2004. The Bankruptcy Court confirmed the plan on October 21, 2004, and granted summary judgment in favor of Piccadilly regarding the stamp tax issue, asserting that the asset sale was integral to the confirmed plan. The District Court upheld this decision, and the Eleventh Circuit Court of Appeals affirmed, leading to the Florida Department of Revenue's appeal to the Supreme Court. The relevant background context includes the interpretation of §1146(a) of the Bankruptcy Code, which provides a stamp-tax exemption for asset transfers made under a confirmed Chapter 11 plan. The case raised significant questions about the timing of asset transfers in relation to plan confirmation and the applicability of tax exemptions for pre-confirmation transactions deemed necessary for the consummation of a confirmed plan. The Supreme Court ultimately ruled that the stamp-tax exemption did not apply to transfers made before a Chapter 11 plan was confirmed, reversing the lower court's decisions.

Whether the stamp-tax exemption under §1146(a) of the Bankruptcy Code applies to asset transfers made before a Chapter 11 plan is confirmed.

The judgment is reversed.